DY. COMMISSIONER OF INCOME TAX, MUMBAI vs. MAHARASHTRA STATE CO-OPERATIVE BANK LIMITED, MUMBAI

Facts

The assessee claimed an amount of Rs. 32,69,10,665/- as provision for investment depreciation reserve. The Assessing Officer disallowed this claim, treating it as notional expenditure. The CIT(A) allowed the assessee's appeal, following previous orders of the Coordinate Bench.

Held

The Tribunal held that the assessee is entitled to claim deduction on account of investment depreciation reserve, following the decision of the coordinate bench and High Court. However, the matter was restored to the AO for factual verification of the reserve working as per RBI guidelines to determine the allowable deduction.

Key Issues

Whether the provision for investment depreciation reserve is allowable as a deduction. Whether the CIT(A) erred in deleting the disallowance made by the AO.